Appraisers Participation Needed – Tackling BPO & CU Issues

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Appraisers Participation Needed - NMAC Tackling BPO's & CU Issues

The appraisal industry was blindsided once again only this time by the AG’s office when they determined that the Real Estate Appraiser Board cannot regulate BPO’s.

The New Mexico Appraiser’s Coalition and the Rio Grande Chapter of the Appraisal Institute sent a joint letter to the Appraisal Board prior to a hearing that was held in January to discuss the BPO language in the Appraiser Act. Although we feel we provided enough information to guide the Board, the Attorney General Representative at the meeting made the determination that the Appraisal Board had no jurisdiction over the BPO product.

Even though BPO language has been a part of the Appraiser Act for several years, we now hear from the AG’s office that the board has no enforcement of this product.

Although the use of BPO’s by Real Estate Agents appears to be a lost cause, I believe further investigation must be made by the appraisal groups and the AG’s office needs to look at the enforcement requirements into consumer protection and use of the BPO product.

The Interagency Appraisal and Evaluation Guidelines recently published by the OCC, FRB, FDIC, OTS and NCUA have made some issues clear pertaining to the use of BPO’s.

The above guidelines XII Evaluation Development

“A valuation method that does not provide a property’s market value or sufficient information and analysis to support the value conclusion is not acceptable as an evaluation. For example, a valuation method that provides a sales or list price, such as a broker price opinion, cannot be used as an evaluation because, among other things, it does not provide a property’s market value”.

The above is taken from the Interagency Appraisal and Evaluation Guidelines which I would advise those interested to read and then determine the next course of action. We believe the AG’s office should require the Real Estate Commission to regulate the use of BPO’s that are currently being used within our State.

The New Mexico Real Estate License Law and Real Estate Commission Rules 2014-2015 Edition places requirements on Realtors that should be of interest when performing a BPO as a valuation product.

Those concerns should be:

  1. Does their E & O coverage cover acts which do not fall under the sale or listing of real estate?
  2. Are the Realtors that are performing these BPO’s for valuation in compliance with their Broker duties & disclosures?

It would appear that we as appraisers need to insure that the public trust is not put in jeopardy and that State and Federal requirements are being met.

We will keep you informed on this issue of BPO’s that are being used as valuation tools in violation of the Dodd Frank Act, but will need every-ones cooperation in reporting these BPO’s to the Real Estate Appraisers Board. The Appraiser Board should have authority over a product that is being used as an appraisal that is performed by a non-licensed person.

Another current issue is the CU – Collateral Underwriting policies and impact on appraiser livelihood.

We have received several complaints from different appraisers that they have been given 1-5 ratings on appraisal work performed based on “what their peers have been submitting”.

Who are these peers and what information have they been providing for this modeling?

We have received comments from the Appraisal Institute and are planning visits with State representatives and the New Mexico delegation when available on the issuance of these ratings and their short comings.

You need to read Fannie Mae Lender Letter LL-2015-02 to be familiar with the pit-falls we are facing now and in the future.

The New Mexico Appraiser’s Coalition has teamed with the Rio Grande Chapter of the Appraisal Institute in our efforts to inform the public and appraisers of the most current issues that might impact our profession. The Appraisal Institute has continued in the effort to keep our lobbyist Minda McConagle who has been our eyes and ears at the legislature in that most of us do not have the neither time nor experience to deal with the committees and representatives. The Appraisal Institute provided the majority of the funding this year for our lobbyist and has allocated funding to help with next year’s legislative session.

We need more participation from the appraisal community with helping at the legislature or just by becoming a member. All member dues go for paying our lobbyist for each legislative session that works during the year with various legislators when something might affect our industry becomes known. We are in need of additional funding this year to pay the balance owed to Minda at the end of the session. Please access the application form  if you feel your profession is worth investing a little time and money to maintain.

Appraiser Act items we help to secure:

  • The complaint process to ensure that frivolous claims do not become part of an appraiser file.
  • Appraisers being able to attach an AMC bond for non-payment of fees
  • Got the bill passed so New Mexico will meet requirements for appraisers performing federally regulated appraisals, which is approximately 90% of the lending business.

Appraisers today are basically small shops with as few as one person offices who have limited input from other appraisers. We believe the New Mexico Appraisers Coalition can provide a conduit through our membership to other appraisers when a problem might arise or a solution to a specific appraisal issue might help an individual rather than spend several hours not finding an answer to their appraisal problem.

Please join the Coalition and become a part of a group that is trying to maintain the integrity of our profession and meet any legislative challenges that happen along due to this ever changing
appraisal industry.

By Richard Hix, President, New Mexico Appraiser’s Coalition (NAMC)

Image credit flickr - Miles Heller
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2 Responses

  1. Koma says:

    Funny story; I had a client (appraisal dept at a bank) ask me why my Opinion of Value was lower than a BPO they had completed recently…could not stop laughing…almost cried..

    The appraisal industry was blindsided? Why! Follow the money man! We appraisers don’t have the money for lobbyists, so it’s a lost cause. Just going with the flow till retirement.

    Koma

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  2. bubba jay bubba jay says:

    OMG i cant wait to watch the news in about 5-10 years about all of this!

    i will be laughing my arse off when the stories start coming out about how there are no appraisers willing to do mortgages anymore, mortgages taking forever to close, nobody willing to do doing FHA appraisals, realtors doing BPO’s, etc.

    i plan on having lots of popcorn and Dr Pepper on standby. this is going to be VERY entertaining.

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